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300+ Reoccurring Medical Home Health Care

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CASH FLOW
$677,816

Specifications

  • Price
    $3,050,000

  • Revenue
    $3,429,188

  • Profit Margin
    20%

  • Location
    Dallas-Fort Worth

  • Service Area
    Dallas-Fort Worth Metroplex

  • Reason for Sale
    Retirement planning

  • Equipment
    $50,000

  • Employees
    90: Nurses, home health aides, social workers, therapists (physical, occupational, and speech)

  • Lease
    3,600 sq. ft.: Private offices, kitchenette, conference room, open work area; available for continued lease, if desired.

Established for 20+ years and with over 300 clients, matching the right caregiver with the right client is the goal of this patient-oriented at-home care company.  Working in seven counties within the Dallas-Fort Worth Metroplex, this business travels to a patient’s home to provide wide ranging care options including nursing care, rehabilitation, evaluations, physical therapy, occupational therapy, speech therapy, and more.  This team cares for their clients 24 hours a day, 7 days per week, 365 days a year.  Caregivers are paired with individuals based on factors such as care needs, personality, medical specialty, and location, seeking to find the best match possible in order to provide the highest quality of care.  Building upon the model, care can be extended to additional individuals within the service area, or expansion could be undertaken to gain new territories and serving more patients. 

 

The highly-trained team includes nurses, home health aides, social workers as well as physical, occupational, and speech therapists.  The owner oversees daily operations and provides assistance to the team as needed.  The administrative team supports operations by providing scheduling, intake information, as well as billings.  The administrative team works from the office, while most caregivers work remotely through the week.  The office is a 3,600 square foot space that has private offices, a kitchenette, a conference room, and a large open work area with cubicles.  The space will be available for continued lease, if desired. 

Business Highlights

  • Year Established: 1998
  • Location:  Dallas-Fort Worth
  • Service Area:  Dallas-Fort Worth Metroplex
  • Services: Home health care services including nursing care, medical care, rehabilitation, evaluations, physical therapy, occupational therapy, speech therapy, telehealth, and more
  • Clients: Seniors, those needing care at home due to rehabilitation
  • Lease: 3,600 sq. ft.: Private offices, kitchenette, conference room, open work area; available for continued lease, if desired.
  • Reason for Selling: Retirement planning
  • Personnel: 90: Nurses, home health aides, social workers, therapists (physical, occupational, and speech)
  • Seller Training Period: 6-9 months
  • Growth Opportunities: Build client base within the current operations, expand service area, build relationships with providers to gain more word-of-mouth referrals
  • Current Owner’s Responsibilities: 15-20 hours/week  

Financial Highlights

  • List Price: $3,050,000
  • Gross Sales:
    • 2019: $3,429,188
  •  Cash Flow:
    • 2019: $677,816
    •  2018: $698,189
  • Assets Included in Purchase*
    • Equipment: $50,000
    • AR: $224,837
    • AP: $115,193
    • Intangible Assets: Positive social media reviews, well-established company with many satisfied clients, Well-trained and educated team of nurses/caregivers

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 

Cash Flow Analysis

Description of Financial StatementP&L StatementP&L StatementP&L StatementNotes
201920182017
GROSS SALES$3,429,188$3,530,347$3,818,148
Net Income Shown on Financial Statement$90,309$-32,665$326,178
ADDBACKS
Compensation to Owner$359,999$360,001$361,827
11% Tax on total W2 Salaries$39,599$28,800$28,946
Auto-Personal Use$3,950$1,474$5,430Personal expense
Entertainment$2,298$4,585$10,409Personal expense
Travel$3,123$0$464Personal expense
Overhead for Outside Business$60,000$50,000$40,000Paid for separate business
Contributions/Donations$0$3,100$3,840Non-onward going expense
Property Taxes for Outside Business$12,437$28,493$26,678Paid for separate business
Private Insurance Recoup$0$175,000$-87,500Non-onward going expense
Interest$6,779$11,644$1,168
Depreciation$0$18,740$15,779
Other Non Reoccurring Expenses $4,630$0$0
Property Tax $49,692$0$0
Legal Expense$5,000$0$0
PT Cost $40,000$49,017$0
TOTAL ADDBACKS$587,507$730,854$407,041
Seller's Cash Flow = Total Addbacks + Net Income$677,816$698,189$733,219
Profit Margin19.77 %19.78 %19.20 %
  • Profit margin: 20%

Clients and Services

Clients:

  • Seniors
  • Those needing care at home due to rehabilitation

Home health care services:

  • Nursing care
  • Rehabilitation
  • Evaluations
  • Physical therapy
  • Occupational therapy
  • Speech therapy
  • Telehealth
  • And more

Personnel

Total personnel: 90

  • Nurses
  • Verified home health aides
  • Physical therapists
  • Occupational therapists
  • Speech therapists
  • Social workers

Growth Opportunities

  • Build client base within the current operations
  • Expand service area
  • Build relationships with providers to gain more word-of-mouth referrals

Valuation Details

The Firm used a cash flow valuation methodology to determine the purchase price of the business. 

The formula used is as follows:

Cash Flow       x          Prescribed Multiple     =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A prescribed multiple is determined by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiplier.

For this business, a 2019 cash flow was used with a prescribed multiple is 4.5.  With this information, the computation is as follows:

$677,816         x          4.5       =          $3,050,172

The fair market value found above positions the business list price at $3,050,000

Funding Example

Purchase Price:                          $3,050,000

12.5%Buyer Down Payment:   $381,250

12.5%Seller Financing:            $381,250

75%Bank Loan:                      $2,287,500

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $7,108.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $30,061.

After business expenses and loan payments, a buyer with a 12.5% down payment of $381,250 would retain a profit of $231,792, which results in a 60% return on investment in the first year.

A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $3,050,000 with the terms listed above, the coverage ratio is 1.52. 

Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

Purchase Price:

$3,050,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2019 cash flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2019 cash flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.